Chandler’s ( 1977 ) famous phrase, a ‘‘visible hand,’’ a hierarchical structure organ-
izing the mobilization and allocation of resources. Chandler’s account of this
process is benign, or at least neutral. Hannah reminds us, on the other hand,
that the visible hand has often displaced the market in making brutal decisions:
‘‘The harshnesses of capitalism that remain may still bear down heavily on indivi-
duals... [but]... more as a result of decisions which emanate from a managerial
hierarchy which has supplemented the market as a means of co-ordinating
economic activities’’ (Hannah 1983 , 2 ).
The giantWrm is a dominant feature in the landscape of the modern market
economy, and one question takes us to the heart of the political science interest in
economic institutions: How can theWrm be controlled? An economical way to
explore this is through the study of economic regulation.
3 Economic Institutions and Economic
Regulation
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The study of economic regulation strikingly illustrates our key opening theme: The
inseparability of the life of conventionally labeled ‘‘political’’ and ‘‘economic’’
institutions. The theme emerges clearly in examination of three big questions
about economic regulation. First, how do the institutions of economic regulation
evolve and operate? Second, have the great changes in economic policy and practice
associated with the end of the ‘‘long boom’’ of the middle decades of the twentieth
century created a paradigmatic shift in the relationship between economic and
political institutions—an assertion that lies behind some theories of the emergence
of a ‘‘regulatory state’’ governing economic life. Finally, what has been the impact
of the most argued over structural economic shift of recent decades—the acceler-
ated pace of globalization—on the regulation of economic institutions?
For brevity, we can approach theWrst of these questions through two contrasting
sets of hypotheses: the ‘‘national styles’’ hypothesis and the ‘‘reXexive regulation’’
hypothesis. The Wrst asserts that the institutions of regulation are likely to be
unique to their national setting; the second that in structure and performance
they are converging on a common model. 1
1 There is another important stream in the regulation literature, derived from neoliberalism: it
oVers charging as an alternative to command and control. I do not discuss it here partly for reasons of
space and because some of the ‘‘charging’’ model is accommodated within reXexivity models.
economic institutions 147